Association for Public Policy Analysis & Management

Numerous policy and program initiatives exist to encourage homeownership among low-income households. Although some of these initiatives appear to be associated with objective increases in average wealth and higher standards-of-living among the targeted participants, considerable outcome variability exists. Moreover, little is currently known about the subjective experiences of these households in relation to their transition to homeownership. In light of the growing body of research suggesting that relative economic circumstances matter more than objective ones in determining subjective well-being, it is possible that low-income households who participate in targeted homeownership programs may experience little lasting subjective economic benefit.

Thus, I seek to answer the questions of whether low-income homeowners perceive themselves to be more economically mobile than similar renters and whether they experience greater satisfaction with their financial situations.  To this end, I consider the subjective intergenerational economic mobility experiences and financial satisfaction of more than 2,000 low-income households in the U.S. who participated in the Community Advantage Panel Survey (CAPS), which was administered annually between 2003 and 2014. CAPS participants are largely representative of the U.S. low-income and minority population with respect to distributions of race and income. This population is often the target of public policies that are intended to facilitate economic mobility.

The survey questionnaire collects information about the subjective intergenerational economic mobility of CAPS respondents by asking about how they rank their financial situations relative to those of their parents at similar ages. It collects this information on three different occasions (2005, 2008, 2012), both before and during the financial crisis. In addition, the survey asks respondents to rate their satisfaction with their current financial situations, and this rating is collected annually between 2008 and 2012. The survey also collects comprehensive demographic, financial, and geographic information about the survey participants.

I use descriptive and panel data methods to assess the drivers of subjective intergenerational economic mobility and financial satisfaction and to assess how these measures evolved during the period of recession in tandem with changes in life circumstances, such as divorce, unemployment, and residential tenure status (i.e., owning vs. renting). The analysis contributes to the growing body of literature on the economics of happiness and subjective well-being by suggesting the analogous concept of subjective economic mobility. The results not only inform our understanding of how low-income households experience housing tenure status, but also provide insight into the effectiveness of programs and policies that seek to promote the economic mobility of low-income households via homeownership.